Monday, January 31, 2011

Gold Price Traded Down From Friday's High to Close at $1,333.80

Gold Price Close Today : 1333.80
Change : (6.90) or -0.5%

Silver Price Close Today : 28.174
Change : 0.240 cents or 0.9%

Gold Silver Ratio Today : 47.34
Change : -0.654 or -1.4%

Silver Gold Ratio Today : 0.02112
Change : 0.000288 or 1.4%

Platinum Price Close Today : 1788.80
Change : -3.60 or -0.2%

Palladium Price Close Today : 813.65
Change : 1.15 or 0.1%

S&P 500 : 1,286.12
Change : 9.78 or 0.8%

Dow In GOLD$ : $184.31
Change : $ 2.02 or 1.1%

Dow in GOLD oz : 8.916
Change : 0.098 or 1.1%

Dow in SILVER oz : 422.09
Change : 2.39 or 0.6%

Dow Industrial : 11,891.93
Change : 68.23 or 0.6%

US Dollar Index : 77.74
Change : -0.504 or -0.6%

Over the weekend the GOLD PRICE traded down from Friday's $1,345+ high. While Europe had it, gold eroded from 1338 to $1,325. New York Open took it up over $1,330, but just as quickly it slammed back down to $1,323. A long rise followed from 9:30 to 1:00 p.m. EST to $1,337, but gold fell again to $1,333.80, down $6.90, when Comex closed at 1:30. Balance of the day was sideways.

Bottom line here is that Gold reacted today against Friday's rise, no surprise, and has since Wednesday formed a clear upside-down head and shoulders, which usually leads to higher prices. Gold would smash the meaning out of that formation if it closes below $1,325, and signal lower prices to come.

Let us watch, though, and see whether Gold can clear $1,360.

The SILVER PRICE let go of nothing today and grabbed another 24c to close Comex at 2817.4c, clearly punching through 2800c resistance. Low today was 2752c, which was roughly the high on Wednesday and Thursday. Thus silver appears to have escaped gravity. Today's highs fell at 2844c.

On a longer term chart silver touched its 20 day moving average today (2820c), but, but, but the 20 dma closed BENEATH the 50 DMA (2867) four days ago, and that is NOT a bullish sign.

Just as SILVER and GOLD closed confused today, so am I. Over my shoulder I am looking for a surprise rally that might take metals up to new highs and the GOLD/SILVER RATIO to a new low. On the other hand, the charts before my eyes are mumbling and whispering about lower prices -- and the time elapsed since that 3 January high seems so short.

Well, I reckon if it was easy politicians and bankers would be doing it.

Markets never pass up a chance to humble and bewilder. Look at silver and gold today. Gold, which in the face of the Egyptian "crisis" should have risen, fell instead. Silver, which ought to have followed or been weaker than gold, rose. That famous safe-haven the US dollar fell, too -- hard.

A reader wrote asking me why I didn't mention the upheaval in Egypt as a cause of gold's rise on Friday. Mainly because I don't put much stock in so-called "safe haven" moves. If they run counter to the prevailing trend, they have no lasting effect. If they run with the trend, they only drive it a bit further. Either way, as soon as the crisis passes, the effect passes. Usually it's just noise to filter out.

Speaking of Egypt, do any of you mushrooms besides me entertain a tee-tiny doubt about the "spontaneity" of the uprising in Egypt? Does anybody with even a tenth of a brain left believe that a big, mean government that has held power 29 years by jailing and otherwise silencing its opponents can be overthrown by a bunch of hollering nerds on Twitter or Tweeter or Tweety-Bird or whatever it's called? Now think about that. Yes, yes, the Spirit Of Democracy rises up against the Tyrant, arm in arm in solidarity with the Easter Bunny and Tweety Bird. Hmmmm.

Friends, I am just a natural born durn fool from Tennessee, but even I suspect a set-up, more so when Bernard O'Bama and Handsome Hillary mumble about democracy, which looks so much like throwing Mubarak out of the rowboat that I can't tell the difference. Just to show that even a blind hog finds an acorn now and then, the execrable Franklin Roosevelt said, "Nothing happens by accident in politics. If it happened, somebody made it happen."

All that the US dollar index accomplished was to reach up and touch its 20 DMA at 78.22, then fall back. Today the dollar lost 50.4 basis points (0.65%) to end the day at 77.735, but during the day made a low at 77.55, slightly lower than Friday's 77.61.

The dollar index has now carved out for itself a new shelf of support at 77.60. Fall off that, and it will revisit 76. My bias still hints that the dollar will turn and rise, but my chief grounds for that is the dollar's long fall accompanied by madly optimistic silver and gold markets. The pendulum swings, so count on it, be it sooner or later.

On a five-day chart today's "advance" in the Dow, 68.23 points, looks like no advance at all. The gate looks firmly closed on the Dow at 11,900. Last two day's trading have dragged the Dow down to its 20 DMA (11,802.37) which might stop the fall, or might merely ring the first warning bell. I'll take that second. Dow closed at 11,891.93 and the S&P gained 9.78 to close at 1,286.12

I know the January rule for stocks, "As goes January so goes the year." If stocks gain from 31 December to 31 January, they supposedly will gain for the year. Well, ride that horse if you want 'til he falls dead beneath you, but I want no ride at all on stocks, thanks very much. Sorrow, woe, and grief lie that way. (Dec. 2010 Dow closed 11,573.42; today, 11,891.93.)

On this day in 1609 the Amsterdam Exchange Bank was founded. It accepted deposits of foreign coin and silver and gold bullion, and issued the depositors credits. By generally sound management as and exchange and warehouse, it managed to stay in business until the city took it over in 1790. Sooner or later, I reckon, all banks go bad.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
Phone: (888) 218-9226 or (931) 766-6066

© 2010, The Moneychanger. May not be republished in any form, including electronically, without our express permission.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't.